SWISS REACTION TO NORTH KOREAN NUCLEAR TEST

C O N F I D E N T I A L BERN 001910

SIPDIS

SIPDIS

TREASURY FOR U/S LEVEY, A/S O'BRIEN, AND OFAC

E.O. 12958: DECL: 10/11/2016
TAGS: KNNP PREL PARM SZ
SUBJECT: SWISS REACTION TO NORTH KOREAN NUCLEAR TEST
ANNOUNCEMENT

REF: A. SECSTATE 169418

B. SECSTATE 166404

C. BERN 1876

Classified By: DCM Carol Urban, Reasons 1.4 b/d

1.(C) Summary: Switzerland condemned North Korea's announced
nuclear test and is committed to full implementation of
binding sanctions by the UN Security Council. Swiss
officials were non-commital on what measures they might take
if UNSC sanctions are ineffectual, but underscored that Swiss
banks were already self-limiting their engagement and the
export control office had implemented a "no go" on technology
exports to the DPRK. The Swiss reiterated their strong
recommendation that the U.S. Treasury Department revive the
international sanctions implementation experts group that
last met in 2001 (REF C),in order to ensure that any UNSC
sanctions imposed would be consistently applied. End summary.

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Swiss Public Statement
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2.(U) The Swiss Federal Department of Foreign Affairs (DFA)
released a statement on October 9 condemning the nuclear test
announced by North Korea. The statement said the test
"threatens the security of the region and could lead to a
regional arms race." Switzerland, the statement added, "is
actively committed to non-proliferation and complete
elimination of nuclear weapons." The DFA expressed its
support for the six-party talks and vowed that "Switzerland
will cooperate with any decision by the UN Security Council
to impose binding sanctions against North Korea."

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Urging a Proactive Stance
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3.(C) DCM and Poloff met with Swiss DFA Co-Deputy Political
Director Heidi Tagliavini and Asia Director Pierre Combernous
to encourage common action on North Korea, per REF A. Noting
the recent visit of Treasury Under Secretary Stuart Levey,
the DCM urged Switzerland to identify its own ways to target
North Korean entities engaged in proliferation, including
through restrictions on financial transactions. Since it was
not at all certain that China and Russia would permit a
decisive Chapter VII UNSC resolution to enforce binding
sanctions on the DPRK, like-minded nations in Europe, North
America, and the Pacific Region needed to consider options
for joint action. Poloff handed over the Japanese and
Australian lists of designated DPRK entities (following
earlier transmittal of the USG list).

4.(C) Having just arrived in her position, Tagliavini
deferred to Combernous for a substantive reply. Combernous
said he had recently told North Korean Ambassador Il-Chol
that a nuclear test would worsen - not enhance - North Korean
security. Now, Switzerland was very anxious to see what
would come out of the UN Security Council. On the issue of
sanctions beyond those mandated by the UN, Combernous told
Emboffs that Switzerland was not in the practice of making
their own designations. He agreed that action by the EU on
designating entities would encourage the Swiss to follow
suit. Combernous asserted there would be little practical
difference whether the Swiss designated or not, since "Swiss
banks had already taken steps" and exports were minimal.

5.(C) Addressing the broader region, Tagliavini and
Combernous described the situation as volatile. Japanese
Prime Minister Abe must have been "peeved" at the test
occurring during his visit to Seoul. While China was
embarrassed by Pyongyang's provocation, Combernous imagined
that there was some "schadenfreude" in Beijing about the
problem facing the United States. Tagliavini observed that
Russia and China were playing both sides and would be mindful
that what they agreed to now could impact future actions on
Iran. Combernous added that Pyongyang seemed to have used
its only strong card, which may have been a miscalculation.
Looking toward the upcoming Nuclear Suppliers Group meeting
in Vienna, Combernous said that he was curious how the USG

would raise its India Civil Nuclear Cooperation initiative,
in light of North Korea's action.

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Reviving the Sanctions Implementation Experts Group
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6.(C) In parallel conversations with Swiss Secretariat of
Economic Affairs (SECO) export control officials, Poloff also
urged them to use Switzerland's prominence in the financial
and high-technology sectors to help pressure Pyongyang.
Export Control chief Othmar Wyss reiterated that SECO had the
word out to Swiss manufacturers that technology exports to
North Korea were a "no go." Bilateral trade was only an
annual $7 million in any case, much of this humanitarian
assistance, agriculture products, and some consumer items
(like watches). Wyss said that the Swiss entities designated
by the USG -- Kohas, AG, and its partial owner Jakob Steiger
-- had informed SECO that Kohas would close down operations
in the near term.

7.(C) Wyss asked whether a new round of UNSC sanctions might
finally prompt the Treasury Department's Office of Foreign
Asset Control (OFAC) to schedule a meeting of technical
experts charged with implementing sanctions. Wyss repeated
his frequent complaint that the Swiss had hosted the last
such meeting in November 2001 and that OFAC had agreed to
host the next meeting, which never happened. Wyss' deputy
Roland Vock underscored that coordination on implementation
would be vital for the success of any new sanctions, since
countries otherwise were free to fashion their own
interpretation on what was and was not to be denied. Poloff
noted that this message had been conveyed recently to
Treasury U/S Stuart Levey, Treasury A/S Patrick O'Brien, and
State A/S Dan Fried, and that the Embassy would continue to
follow up.

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Comment
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8.(C) Switzerland will certainly implement UN Security
Council sanctions on North Korea, but will require steady
prodding to enact measures that go beyond this. Even though
bilateral trade is minimal and Swiss firms and banks seem to
have distanced themselves from Pyongyang, official Swiss
endorsement of our counter-proliferation measures is
important, particularly in conjunction with any potential EU
action. The Swiss proposal to revive the international
sanctions implementation experts group seems very useful;
Embassy encourages Treasury OFAC to consider hosting a
meeting in the near future.
CONEWAY